Atlas Shrugged: The Wealth of Nations

Throughout Atlas Shrugged and her other works, Ayn Rand valorized human ingenuity and drive. In her eyes, the individual ability for achievement is our supreme glory. But where do these desirable character traits come from? What makes one person a productive capitalist while another becomes a shiftless moocher?

This is a question that Rand was staunchly incurious about. For all that she glorified brilliance, she never addressed what its origins or precipitating conditions were. The novel seems to suggest every possible answer. Dagny Taggart is a super-capitalist railroad heiress while her brother, Jim, is one of the most evil of the looters. Francisco d’Anconia’s omnicompetence is stated to be the culmination of a long line of talented aristocrats, almost as if his family were an example of selective breeding. But the ideal man, John Galt, came from nowhere and has no family history. The novel ironically (almost a lampshade) compares him to Athena springing fully-formed from Zeus’ head.

Rand’s waffling about whether great capitalists are born or made can be seen most clearly on the question of education. Her hero Hank Rearden dropped out of school at fourteen to work in a mine, but not only did he not suffer any lifelong intellectual deficit, he became a supergenius executive who invents metal alloys and bridge designs better than anything that anyone else has ever thought of. And another scene pours scorn on the college-educated villains, implying that higher education is only for the weak-minded and evil.

Given this evidence, you might think Rand believed that capitalist genius is an innate spark that you either have or you don’t. But then we encounter the minor character of Tony the Wet Nurse. According to the text, his mind was crippled by socialist education, but when he’s exposed to the better example of Hank Rearden, he comes to realize why capitalism is good. So does upbringing matter or doesn’t it? Do accidents of circumstance determine whether a person becomes a heroic businessman or a grasping looter?

Just as Ayn Rand avoided the question of what makes a person succeed or fail, she also avoided the question of what makes a society succeed or fail. To the extent that she had an answer, it was always “more capitalism”. Yet this ignores the other vital ingredients that are crucial to a nation’s economic welfare.

I grant the power of free markets to spur innovation and generate prosperity, but what Rand never recognized is that a free market isn’t a self-sustaining state of nature. In the absence of a watchdog, markets will either be overrun by fraud and corruption, or the biggest player will try to take over and squeeze out competition, or both. Sometimes it’s done through dirty tricks or anticompetitive tactics, sometimes through outright violence: as with businessmen hiring mercenary armies to take over a country, or massacring striking workers.

We need strong, effective government to prevent these outrages, to keep the market running smoothly and the playing field level. Good government can break up monopolies that use their power to stifle competition and innovation. Government can also foster competition by enacting standards for businesses to work together – so that one company’s trains can travel on another’s track, or so a lightbulb from one manufacturer works with a lamp from another, or so people using different phone companies can call each other. And in bad times, government can serve as a guarantor of stability to limit the fallout from panics and crashes and keep markets from collapsing in chaos.

We also need government to provide the public goods that every society needs but that no single individual has an incentive to pay for. This includes clean water and air, reliable utilities, and, yes, universal public education. Contrary to Atlas Shrugged‘s view that talent and intelligence are inexplicable endowments that spring from nowhere, the evidence suggests that a quality education, especially early childhood education, makes a lifelong difference.

Good government also fosters a healthy economy by protecting the rule of law. In the absence of rigorous oversight, bribery, corruption and other scams flourish like strangling weeds that choke out honest competition. Rand paid lip service to this idea, in that her ideal utopia would have police and courts, but undermined it with the ludicrous proposal that they could be funded by voluntary donations rather than taxes – with the obvious-to-everyone-but-her result that the justice system would be captured by wealthy influence peddlers who’d pay for favorable verdicts.

And then there are the innovations that come from public funding of scientific research. Typically, these are blue-sky ideas that have no commercial application at first, but some of them have gone on to reshape the world. Space flight, nuclear power and the Internet are three of the biggest examples. Rand deals with this by writing these inventions out of history, ignoring the successes of government science, and depicting every public-sector employee as a bumbling incompetent.

The dark side of this is that, just as good government gives rise to prosperity, nations can also grow rich and successful through conquest and plunder. That uncomfortable fact is another thing that’s absent from Ayn Rand’s simplistic morality-play view of history.

This is best shown by her massive blind spot on slavery. In one of her trademark character filibusters, she has Francisco d’Anconia ludicrously praise the United States as the first nation where there were no “fortunes by conquest”, ignoring the fact that so much of our wealth was built on the backs of enslaved people. (Rand did acknowledge the genocide of the Native Americans, but she cheered it on.)

Even New York City, which Rand idolized as the supreme temple of capitalism, was built with slave labor. Streets like Broadway, or the wall that Wall Street is named after, were constructed by slaves. Major corporations like Aetna and JPMorgan Chase got their start through buying, selling and trading enslaved human beings and the commodities produced by their forced labor.

In all these ways, history refuses to conform to Rand’s simplistic worldview. Her answer to that was to construct a literary world where all these inconvenient facts were erased from existence. She ignored education and concluded that people would be just as smart without it. She didn’t believe that crime exists, so her utopia runs smoothly and peacefully even with a nonexistent government. She disdained social safety nets, because she asserted that the free market rewards or punishes everyone exactly as they deserve.

Most of all, Rand believed there was no such thing as luck or chance. In Atlasworld, there’s never a bad break or stroke of good fortune that changes a person’s life, either for the better or for the worse. If you’re properly rational, you can foresee what will happen and plan accordingly. That’s why Francisco can get rich picking stocks as a college student, and why Midas Mulligan always knows which businesses will succeed and which will fail. But it also means that any misfortune that befalls a person can be blamed on their own personal failings, so there’s no reason ever to help anyone else. (This is in line with evidence that successful people rationalize away the role of chance.)

If success in life really were as straightforward as Ayn Rand claimed, adopting her philosophy would be a no-brainer. The problem is that all her reasoning was premised on faulty assumptions. The causes of prosperity are neither as simple, nor as unicausal, nor as black-and-white as she depicted them. In her quest to strip away everything but the “essentials”, she threw out far too much – making her worldview a castle floating in the air, lacking any solid foundation to build on.